Fast-growing restaurant-entertainment chain Dave & Buster's is on the verge of opening a location in Alaska, but the Dallas-based company is hoping for a change in the way a state law is worded before it does.
Lawmakers on Monday held the first hearing for Senate Bill 157, sponsored by Sen. Lesil McGuire, R-Anchorage, which would clarify the state's definition of gambling. That would make it easier for Dave & Buster's to move ahead with plans to open a 44,000-square-foot location on the top level of the Dimond Center in Anchorage.
The bill would update state law to clarify that gambling does not include arcade-style amusement games of skill (as opposed to chance) that reward only tickets, credits, allowances, tokens or anything that can be redeemed for noncash toys, candy and novelties at the same location. It would also say that claw machine games don't count as gambling.
A main component to Dave & Buster's business is arcade games such as skeeball, pinball machines, claw machines and simulation games.
"That's the reason we need to request the change in the law … There's some uncertainty that Dave & Buster's would face if they went forward and made the investment they're contemplating here in Alaska," said Howard Trickey, an Anchorage partner at law firm Holland & Knight, during the Senate Judiciary Committee hearing on Monday. He is representing Dave & Buster's with regard to the proposed legislation.
Further complicating things for the restaurant-arcade chain is an Alaska Department of Law opinion from 2001, which found that paying to play video games for prizes constitutes illegal gambling.
"We have an AG opinion that is outdated, that doesn't reflect how we do business, and then we've had a company ... already in Alaska operating fine without this," said Sen. Mia Costello, R-Anchorage, during the hearing, referring to Chuck E. Cheese's. "So this is a piece of legislation that comes in to clarify and rectify a situation for a specific business."
Dave & Buster's moving into the Dimond Center would also mean a massive construction project for the mall.
Hugh Ashlock, owner of the Dimond Center, said during the hearing the company's location on the top level of the mall where the library used to be would require raising the roof by 8 feet.
"It's going to be a highly skilled project. … This is going to be quite tricky," he said. "We're blowing the roof off and raising it … (it's) the whole nine yards."
Ashlock said on top of Dave & Buster's anticipated $10 million spending on opening the location, the Dimond Center would spend another $13 million (part of the mall's ongoing $50 million expansion).
"This is a really crucial part of our long-term expansion at Dimond Center and a serious anchor for our project as well," Ashlock said.
The new location would employ between 140 and 160 workers, McGuire said in her statement supporting the bill. That would be a bright spot in a city that is expected to lose as many as 1,600 jobs in 2016.
"Passage of this bill will give businesses like Dave & Buster's the sure-footed legal ground to move ahead with their plans," McGuire wrote.
Dave & Buster's generally targets cities with populations of 700,000 to 1 million people within 10 miles, according to its website -- a definition that Anchorage doesn't fit.
But the company is foregoing that because of the opportunity Alaska would provide.
"We've been trying to experiment in different parts of the country," said Dave & Buster's general counsel Jay Tobin during the hearing, via teleconference. "In the case of this location in Anchorage, it's multifold, the reasons we're coming here … first and foremost is the uniqueness of the market."
He cited the fact that Anchorage is a draw for the population of all of Alaska, national and international tourism, the frequency with which people in Anchorage dine out, and the other businesses in the Dimond Center.
Dave & Buster's registered a subsidiary called Dave & Buster's of Alaska with the state at the end of 2014. The company has also been investing in lobbying in the state. Earlier this year, the chain gave Alaska lobbyist Frank Bickford a contract for $65,000, on top of $62,500 for him last year.
SB 157 also has a companion bill in the House of Representatives, House Bill 277. Another hearing for the bill was scheduled for Wednesday afternoon.